It's 'spending time' for downtown board
Now that the Downtown Development Authority has successfully refunded one of the bonds that helped build Van Andel Arena, board members are going to have to determine how to spend its share of the savings.
The refinancing sale last month left the DDA with an additional $1.77 million it was to receive last week. State law requires the board to spend that money, but it can only do so for projects that were on its developments list in 2007.
“We finally refinanced the DDA arena bonds,” said DDA Treasurer Jana Wallace of an effort that began in 2004. “We did pretty well in sales.”
Wallace said about $6 million worth of bonds were sold to retail buyers, many of whom reportedly were local, in a sale that netted $28.4 million. The net present value savings came to 13.45 percent, or roughly $3.5 million. The DDA will split the savings with the state.
The bonds were sold with an interest rate of 5.33 percent. Fifth Third Securities Inc. underwrote the sale.
Wallace said she detected what she called a “Michigan premium” in the market, meaning that bonds from municipalities in the state have to offer a higher interest rate than those in some other states because of Michigan’s poor financial condition. That premium, she said, runs from 15 to 20 basis points.
The DDA issued two bond types in 1994 that totaled almost $55 million, and that revenue went to the construction of the $75 million arena, which opened in October 1996. One type was a serial bond and the other was a capital appreciation bond. The serial bond is the larger of the two; its term ends in 2024.
The capital appreciation bonds the DDA issued have an outstanding principal that tops $9 million and an outstanding balance of about $37 million, which includes interest.
City of Grand Rapids Chief Financial Officer Scott Buhrer said the benefit for the state is the DDA will capture fewer tax-increment dollars from the school millage because the debt has been reduced. The board collects that revenue to pay debt service on the arena, and the state has to replace the captured dollars. But whatever amount the DDA captures that is in excess of the debt payment, it returns to the schools. Last year, that was about $330,000.
Board members recently approved a downtown development liquor license for a new restaurant and sports bar that Peppino’s Pizzeria Ristorante wants to open at 130 Ionia Ave. SW, a building owned by Locus Development.
John Green, a partner with Andy Winkel in Locus, said all the financing is in place for Peppino’s to move in, and a long-term lease would be enacted when the business gets the special license, which is only available in the district and costs $10,000. Green also said both parties were making significant investments in the building.
“We’re looking to do a multi-dimensional type of restaurant,” said Joe DiLeonardo, son of the restaurant’s founder, Carlos DiLeonardo. “It’s been my dream to have a restaurant downtown.”
DiLeonardo said he hopes to host special events at the restaurant, such as parties and small weddings, and that it would seat up to 200 customers. The family-owned business is basing its downtown restaurant on a similar eatery it owns and operates on Lake Michigan Drive near the Allendale campus of Grand Valley State University. Peppino’s also has restaurants that feature its pizza throughout the county.
The City Commission and the state Liquor Control Commission also have to approve Peppino’s application.
Board members also agreed to add $27,590 to their original commitment of $320,000, approved last year, for construction of the new Downtown Senior Center at 333 S. Division Ave. Dwelling Place CEO Dennis Sturtevant and Senior Neighbors Executive Director Bob Barnes said more funds were needed, largely because the project had over $42,000 in change orders, with most of that coming from $22,000 in changes required by city inspectors after the permits had been issued.
The cost to renovate the building for the center was about $474,000 and Barnes reported his organization raised $126,000 in private funds for the project. An open house is set for Thursday at 10:30 a.m.
“The project has come along very well,” said DDA Executive Director Jay Fowler. “It looks great.”